Thoughts on lawyers, dealmaking, M&A and other quirks of corporate life.

Sunday, August 14, 2011

Politics and the Workplace

Several people wondered why I chose a political example for my post about negotiating with madmen. After all, conventional wisdom is that politics shouldn't be mixed with work, right?

And I think that point is correct - if your version of politics is the kind of single-issue advocacy, "principle-and-the-rest-be-damned" or magical thinking that seems to characterize so much of our political discourse. Best to keep it to yourself to avoid coming off as a crank, or someone with some gaping holes in their ability to reason.

But if you are someone who thinks about politics and policy, there's nothing like hashing those ideas out with others at work. Some of the most enjoyable and challenging political discussions I've had have come up this way. Why? Because in the workplace, you're more likely to run across smart people who are approaching these problems from a different perspective (as opposed to solving the world's problems for the umpteenth time with your like-minded college friends).

What's more, as our public political discourse has become more polarized, it's important that people call out the insanity. So to be clear: I don't consider the question of whether the Treasury needs to raise more revenue to be a political one. Rather, it's a self-evident proposition. Revenues are running at a level of GDP (15%) we haven't seen in 60 years. This low level of revenue is supporting a much greater swath of services than existed in the 1950's. While it is an equally self-evident proposition that entitlement spending needs to be cut, there's simply no way our modern industrial democracy can function the way Americans expect it to on a budget of 15% GDP. The political questions include how much revenue needs to be raised (and in what ratio to cuts in spending), in what form (higher taxes for the wealthy, comprehensive tax reform, etc.), and what the ultimate GDP target should look like (history and economics suggest 18-21%).

The grown-ups in the room know this and are asking these questions. There's a lot of work to be done to figure out what the ratio of revenue to cuts should be. My view is that it should be about a 1-2 or 1-3 ratio, but others I respect have suggested we could go as high as a 1-6 ratio.

So it was disappointing to see that every GOP candidate, when asked at last week's debate if they would support raising revenues at a 1-10 ratio of cuts, said they would not. That's not reality. It's not governing like an adult. We need to have a real discussion about how to change our tax code, raise more revenue, and make some fundamental changes (and cuts) to entitlement programs.

And there's no reason to rule out the workplace in having that discussion.